House Hunters: Be Prepared To Sign A Buyer's Agreement

July 25, 2010|By JANICE PODSADA, jpodsada@courant.com

Bob and Doreen Scherker were a bit surprised when real estate agent Anthony Cervoni told them he couldn't show them any homes until they signed a "Buyer Agency Agreement" or an "Agency Disclosure Notice."

"We had other agents that took us to the properties right away without having to sign anything," said Bob Scherker. He and his wife have been house hunting for the past four weeks and don't have an agent who represents them.

But Cervoni's request — that the couple sign the forms before they looked at properties — isn't unusual.

In fact, state regulators say, it's required.

"Anthony drew up a contract just for the houses we saw that day," Scherker said.

If you haven't gone house hunting in a couple of years, you may be taken aback if you are immediately asked to read and sign a buyer agreement or a disclosure notice. While the regulations have been on the books for more than a decade, "There's a renewed emphasis on making sure the forms are signed," said Eugene Marconi, an attorney for the Connecticut Association of Realtors.

By law, an agent cannot physically show you any properties until you sign a buyer broker contract. If you choose not to be represented, you can still view the agency's listings, but only if you sign a disclosure form stating that you "know the agent only represents the seller," explained Cervoni, who's with Coldwell Banker Premiere Real Estate in Berlin.

When you stop in at a real estate agency and ask for the listing agent to show you a property, the listing agent may not be available. In that case, the broker may ask another agent to show you the property.

Here's the issue: "While one agent is the listing agent, every agent at that firm represents the seller," Cervoni said. "If you're not aware of that, you may inadvertently end up telling the agent information you don't want the seller to know. The buyer agreement exists to clearly spell out who the Realtor represents."

If you don't want to sign a buyer contract, you can walk away. However, if you want to view the firm's listings, you must sign a disclosure notice that says you understand that the agent only represents the seller.

" Connecticut is a little bit unique in the level of protection and education that we try and give to buyers compared to a lot of other states," Marconi said.

Negotiate The Terms

The documents can be intimidating, especially if all you want to do is look at a nice little Cape, and suddenly an agent you've just met and don't know if you'll like asks you to sign a six-month contract.

"One of the things I hear from our members is that buyers are anxious to start looking, and then they have to go over all these forms that have been put in place for the buyer's protection," Marconi said.

But here's the good news: Like a seller's agreement, the terms of the buyer agency agreement are not set by law. That means before you sign, you're can negotiate the terms of the contract.

The duration of the agreement is negotiable. Most agents tend to make it binding for at least 180 days, but you can ask for fewer days.

And you're free to negotiate the agent's commission. The agent can accept or decline your terms.

You can also specify which properties are subject to the buyer agency agreement. For example, if you want to look at three of the agency's listings that day, you can limit the contract to just those three properties.

"If you want to make it for just one house, I can do that as well," said Cervoni.

You can also limit the contract to a specific area, such as one street, a single county, a portion of the state or the entire state — it's up to you.

Confidentiality And A Paper Trail

"When you sign the buyer agreement, your agent and the brokerage are pledging confidentiality," Cervoni said. "You get the benefit of their experience and the expertise of the brokerage."

The buyer agreement also protects the agent, providing a paper trail so that the brokerage can be paid, "If you sign it, and you buy the property, it entitles the agent to a commission," Marconi said. "After all, agents do work for a living."

That is fine with Bob Scherker, who has been in sales all his life. "I've known friends who were working with an agent. The agent showed them the house, and then they bypass him and buy the house. That's not fair to the agent."

"You have a real estate agent out there working strictly on commission," Scherker said. "They're driving you around, using their gas and doing all the work."

These regulations were put in place for the buyer's protection, Marconi said, "but you can't be protected if you don't know about it. Spend the five or 10 minutes, and ask the agent to tell you about it, and then read it over. Don't be afraid to ask questions."

"It's not the most enjoyable reading in the world," said Scherker, "but the agreement pretty much protects you, the consumer, and it protects Anthony, the Realtor.

"It's a contract — there's nothing fancy in there. It gives you the information you need. If you're really out there to purchase a home, you're protected."